USD/JPY climbs back above mid-113.00s, reversing a major part of overnight slide

A combination of factors assisted USD/JPY to regain positive traction on Thursday.
Hawkish Fed expectations helped the USD to stall the post-US CPI corrective decline.
The risk-on impulse undermined the safe-haven JPY and exerted additional support.

Haresh Menghani FXStreet

The USD/JPY pair climbed back above mid-113.00s during the Asian session and reversed a major part of the previous day's profit-taking slide from multi-year tops.

The US dollar witnessed aggressive selling on Wednesday and erased its weekly gains to 13-month tops amid the post-US CPI slide in the longer-dated US Treasury bond yields. The headline US CPI for September rose 0.4% in September as against 0.3% anticipated and lifted the yearly rate to 5.4%, again beating expectations for a reading of 5.3%. Investors, however, seem aligned with the Fed's transitory inflation narrative, which, in turn, dragged the US bond yields lower.

Nevertheless, the US CPI report reaffirmed market expectations for a potential interest rate hike in 2022. Moreover, the minutes of the latest FOMC monetary policy meeting held in September showed that the US central bank remains on track to begin tapering its bond purchases later this year. Apart from this, a modest rebound in the US bond yields acted as a tailwind for the greenback and assisted the USD/JPY pair to regain some positive traction on Thursday.

On the other hand, a generally positive tone around the equity markets undermined the safe-haven Japanese yen and was seen as another factor that exerted additional support to the USD/JPY pair. The fundamental backdrop seems tilted firmly in favour of bullish trades and the emergence of fresh buying reaffirms the positive outlook. That said, overbought RSI on short-term charts warrants some caution before positioning for any further appreciating move, at least for now.

Market participants now look forward to the US economic docket, featuring the release of the Producer Price Index (PPI) and the usual Weekly Initial Jobless Claims data. This, along with the US bond yields, will influence the USD price dynamics. Traders might further take cues from the broader market risk sentiment for some short-term opportunities around the USD/JPY pair.

Technical levels to watch

USD/JPY

Overview
Today last price	113.5
Today Daily Change	0.25
Today Daily Change %	0.22
Today daily open	113.25

Trends
Daily SMA20	111.18
Daily SMA50	110.42
Daily SMA100	110.26
Daily SMA200	108.81

Levels
Previous Daily High	113.8
Previous Daily Low	113.23
Previous Weekly High	112.25
Previous Weekly Low	110.82
Previous Monthly High	112.08
Previous Monthly Low	109.11
Daily Fibonacci 38.2%	113.45
Daily Fibonacci 61.8%	113.58
Daily Pivot Point S1	113.05
Daily Pivot Point S2	112.85
Daily Pivot Point S3	112.48
Daily Pivot Point R1	113.63
Daily Pivot Point R2	114
Daily Pivot Point R3	114.2

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

AUD/USD remains below 0.7000 amid light trading

AUD/USD fills a modest bearish gap on Monday, but remains below 0.7000 in the Asian session amid holiday-thinned liquidity. The US Dollar attempts a bounce even as US bond yields pull back from multi-year highs, limiting the pair. Moreover, diminishing odds of another RBA rate hike in November cap the Aussie.

USD/JPY hovers above 158.00 amid Japan/ US holiday

USD/JPY extends its range-bound price action into a new week, trading above 158.00 as bulls remain on high alert amid speculation that authorities will step in to prop up the Japanese Yen. Meanwhile, softer US bond yields keep US Dollar bulls on the back foot and cap the pair's upside. However, geopolitical uncertainties could limit losses for the safe-haven buck amid thin liquidity due to a holiday in Japan and the US.

Gold sticks to modest losses; seems vulnerable below $4,200 on Fed hike bets

Gold extends its intraday retracement slide from a one-week high, hitting a fresh daily low around $4,170 during the early European session. The US Dollar attracts fresh buyers after a modest downtick amid the US Federal Reserve's hawkish outlook, which, in turn, is seen as weighing on the non-yielding bullion.

Pi Network Price Forecast: PI defends $0.0800 support as selling pressure mounts

Pi Network is trading in the red on Monday, hovering above $0.0800 as selling pressure mounts. PI token’s speculative demand is easing, with Open Interest below $9 million despite rising social chatter, hinting at panic-driven buzz among investors. The technical outlook for PI suggests a bearish bias, with the risk of breaking below the $0.0800 support level.

USD/INR: Deep in red below 96.00 as RBI rescues Indian Rupee

After opening significantly higher against the US Dollar (USD) on Monday, the Indian Rupee (INR) clings to recovery gains near 95.80. The pair remains undermined by the Reserve Bank of India’s (RBI) fresh measures to curb US Dollar demand, which has brought relief for the Indian currency.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?